Which is one of the purposes for a firm to use a cash budget?
to minimize profits and losses
to prepare for changes in cash flow
to avoid tax liability
to review past expenditures
The Cash budget contains an itemization of the projected sources and uses of cash in a future period. This budget is used to ascertain whether the company operations and other activities will provide a sufficient amount of cash to meet projected cash requirements. If not. managerment must find additional funding sources.
SO the answer should be to prepare for changes in cash flow.